Pionero Philanthropy uses its 5 Pillar Evaluation to assist our partner nonprofits in improving their management practices

5 Pillar Evaluation Resources For Nonprofits

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Browse online resources and suggested reading for nonprofits on the academically supported best practices in each of our five key pillars of nonprofit management:

sustainability
efficiency
transparency
relevance
impact

Pionero Pihlanthropy Evaluation Pillar Sustainability

A nonprofit’s ability to keep their function,

survive, and accomplish its mission in the long term.

Clear Mission & Vision

A clear mission and vision successfully guides a nonprofit into the future. These statements should provide a clear purpose for the organization and something to aspire to.

  • Strategic Planning for Nonprofit Organizations: A Practical Guide for Dynamic Times, 3rd Edition by Michael Allison & Jude Kaye
  • Fatal Illusions: Shredding a Dozen Unrealities That Can Keep Your Organization From Success by James R. Lucas
  • Strategic Management for Nonprofit Organizations: Theory and Cases by Sharon M. Oster

Diverse Board Composition

A nonprofit board should provide proper representation of diversity in terms of race, ethnicity, gender, age, ability, and professional skills in order to bring new ideas and experiences to the administration of the nonprofit.

Local Leadership

Local leadership creates more insight and buy-in from the community. Local leaders apply lived experience to programming and have the ability to maintain more trust within the community.

  • Understanding and Managing Public Organizations, 4th Edition by Hal G. Rainey

Women in Leadership

Though nonprofit staff is majorly made up of women, women continue to face a glass ceiling when it comes to nonprofit leadership.

Youth in Leadership

Youth provide creativity and a new outlook on nonprofit management and programming. Youth within the leadership team have the potential to stay with the organization for longer and drive the organization into the future. Pionero Philanthropy uses the United Nations definition of  ‘youth as those persons between the ages of 15 and 24 years.

Coordination with Government Systems

To ensure sustainability locally, an organization must try to coordinate with local government systems whether it be on the municipal, departmental, or national level. Programming should be in line with locally set plans for development to ensure continued support.

Cultural Awareness & Competency

Every nonprofit should be fully aware of the cultural environment in which they are situated and working. The organization should take strides to ensure competency and take actions to implement programming based on cultural relativism, local customs, languages, and beliefs.

Annual Plan

An annual plan allows an organization to create a roadmap for the year’s operation. Plans should focus on advancing the organization’s mission, vision, and goals. Plans should be revisited regularly to ensure the organization is headed in the right direction.

3-5 Year Strategic Plan

A 3-5 year strategic plan lengths the roadmap created in an annual plan. The extended plan generally aims to include programmatic, operational, and financial goals and objectives over a multiple year period. Once again, plans should be revisited regularly to ensure the organization is headed in the right direction.

Succession Plan

Succession Plans have taken the headlines of nonprofit news in recent years as nonprofit leaders move closer to retirement. Succession plans ensure nonprofit sustainability in terms of administrative flow and a smooth transition in leadership.

Pionero Pihlanthropy Evaluation Pillar Efficiency

A measure of how a nonprofit’s inputs of economic resources such as funds, expertise, time, and equipment are converted into results.

All Financial Numbers Reported & Maintained Up-to-Date (in Pionero Philanthropy Nonprofit Database)

Pionero Philanthropy nonprofit partners are required to regularly update information on their nonprofit profiles. This includes all financial numbers.

Average, or Better than Average, Liquidity Ratios

Cash Ratio | Formula: Cash and Cash Equivalents / Current Liabilities
Cash Reserve Ratio | Formula: Cash and Cash Equivalents / Total Annual Expenses
Current Ratio | Formula: Current Assets / Current Liabilities
Target Liquidity Level | Formula: Cash and Cash Equivalents + Short-Term Investments + Total Amount of Credit Line – Short-term loans

Average, or Better than Average, Funding Ratios

Contribution Ratio | Formula: Total Contributed Revenue / Total Revenue
Debt Ratio | Formula: Total Liabilities / Total Assets

Average, or Better than Average, Operating Ratios

Net Surplus (Deficit) | Formula: Total Revenue – Total Expenses
Net Operating Ratio | Formula: Net Surplus / Total Revenue
Program Expense Ratio | Formula: Program Expenses / Total Expenses
Support Service Expense Ratio | Formula: Support Service Expenses / Total Expenses

Average, or Better than Average, Financial Health Ratios

Operating Cash Flow Ratio | Formula: Operating Cash Flow / Current Liabilities
Asset Ratio | Formula: Current Assets / Total Assets
Administrative Expense Ratio | Formula: Administrative Expenses / (Total Expenses – Administrative Expenses)
Short-Term Category Score | Formula: (Weight8 × Operating Cash Flow Ratio) + (Weight9 × Asset Ratio) + (Weight10 × Administrative Expense Ratio)

No Signs of Financial Fraud or Corruption

Pionero Philanthropy defines nonprofit financial fraud or corruption as fraudulent behaviors such as embezzling organizational funds, money laundering, bonuses or allowances disproportionate to their salary level, and illicit financing for personal and/or individual gain.

Social Return on Investment / Cost Benefit Analysis

The social return on investment and the cost benefit analysis both provide program analysis by applying a monetary “price” to the outcome or impact or weighing the costs versus the benefits.

Cost-Effectiveness Analysis

The cost-effectiveness analysis is an alternative to the cost-benefit analysis. The analysis measures several different scenarios simultaneously to compare the cost of a program in relation to the effectiveness or value of the common outcome.

Performs Internal Ratios & Analyses

Pionero Philanthropy believes that maintaining organizational financial health is of utmost importance in the nonprofit sector. Though Pionero Philanthropy will calculate financial ratios in order to evaluate an NPO, we aim to encourage and teach organizations to perform their own internal ratios and analyses.

Generates Positive Revenue to Further Mission

Mislead by the sector’s name, nonprofits are generally thought to not be able to generate profit. Though they legally must meet the financial obligation of breaking even, nonprofits are encouraged to promote revenue generation to further their mission.

Pionero Pihlanthropy Evaluation Pillar Transparency

A nonprofit’s honesty and openness when it comes to the organization’s administration and finances.

Publicly Available 990 Tax Form (or Guatemalan Equivalent) Through Website

The IRS requires public disclosure of 990 Tax Forms. Though this form can be requested through other sites, easy accessibility to interested parties ensure transparency.

Publicly Available Annual Reports Through Website

Annual reports allow the space for a nonprofit to report out to stakeholders about annual programming, finances, administrative changes, and the like.

Publicly Available Financial Statements Through Website

Though publicly available financial statements apart from the 990 tax form are not legally required, it is best practice to provide additional easily accessible information to interested parties. This may include annual budget and cash flows, employee compensation, and balance sheets.

Publicly Available Board Members Through Website

A nonprofit organization must legally have a board. To ensure transparency and diversity of members serving, it is important to list board members on the organization’s website.

Publicly Available Privacy Policy Through Website

A nonprofit website privacy policy is essential in providing transparent information to website viewers about what information is collected and why.

Publicly Available Proof of 501(c)3 & EIN/ Guatemala Registered Status Through Website

By explicitly stating nonprofit status on the website, an organization can ensure transparency of tax-exempt status directly with the audience. This can commonly be stated in the About Us, the mission, or at the bottom of a webpage.

Publicly Available Conflict of Interest Policy Through Website

The conflict of interest policy ensures ethical behavior amongst the organization.

Publicly Available Whistleblower Policy Through Website

The whistleblower policy ensures protection to employees who may report unethical behavior within the organization.

Publicly Available Internal/External Audit Through Website

By providing an internal or external audit of the organization’s finances online, interested parties can look into the organization’s financial transparency and ensure proper use of funding.

Disclosure: Willingness to Provide Any Additional Information to Stakeholder Upon Request

Nonprofits should be willing to provide complete accountability to interested stakeholders. This means that any information not found on the organization’s website should be granted access through email request. This is legally required for tax information and best practice for other requested information.

Pionero Pihlanthropy Evaluation Pillar Relevance

A nonprofit’s ability to align its mission and programming with what is needed, what matters, and what is deemed as important in Guatemalan communities.

Community Baseline Statistics

Community baseline statistics provide a starting point for nonprofit programming. Baselines can also indicate whether a certain initiative is needed within the community.

Community Diagnostic

A community diagnostic, or a community needs assessment, is conducted before nonprofit programming is implemented in a community. This assessment provides vital information about a community, oftentimes including baseline statistics, community resources, and the development needs and/or desires of a community.

Adherence to National, Departmental, or Municipal Development Plans

As nonprofits bridge the gap between the public and the private sectors, it is important to collaborate with government systems and build off of pre-establish government development plans. As government systems have generally been in place longer than nonprofit programming, the development plans they offer may have key insights into how to address potential issues in context.

Community Engagement, Interest, & Involvement

If a nonprofit addresses the true needs and desires of a community, community interest, involvement, and engagement should come naturally.

Need Not Fulfilled by Public or Private Sector

Nonprofit organizations exist as a unique third sector between the public and private sector and hope to fill the gap left in providing public goods to the population. Nonprofit should target areas where a lack of development exists. By focusing on an area previously unaddressed by others, the organizational programming gains more relevance.

Collaboration with Other Institutions or Organizations

If the nonprofit’s theme is addressed by or overlaps with other organizations, both governmental and nongovernmental, it is important to collaborate and work together to increase outcomes. Though collaboration and partnerships may be seen as challenging, efforts are truly made stronger by working together.

Adaptable Programming

In today’s ever changing society, nonprofits must be able to adapt programming to address current needs and arising situations.

Mutual Benefit

All organizations should prove mutual benefit to both the community and the organization itself. Nonprofit must also place focus on organizational success and benefit to continue serving a community. Capacity building is an excellent way to create mutual benefit and remain relevant.

Physical Presence in Community

As a community is defined by physical location, holding organizational physical presence in the community ensures that an organization is attempting to become part of the community, including staying up-to-date on community changes and forming relationships with key stakeholders on the ground.

“Work Yourself Out of a Job” Mentality / Nonprofit Dissolution

As a nonprofit aims to fill a gap in public goods and address community development, the overarching goal should be to provide programming and services that remedy the current situation rendering the organization unnecessary. After achieving the organization’s mission and vision, a nonprofit organization dissolves either entirely or into another nonprofit.

Pionero Pihlanthropy Evaluation Pillar Impact

A nonprofit’s influence on positive change within the Guatemalan context.

Theory of Change or Logic Model

A theory of change or logic model helps an organization map intended impact. The theory of change should be presented as a cause and effect of organizational programming and the assumptions that are made to put programming in context.

Monitoring & Evaluation of Output Indicators

Output refers to the basic numbers of programming. This could be the number of people in assistance, the number of basic food baskets that were given out, etc.

Monitoring & Evaluation of Outcome Indicators

Outcome refers to the impact or effectiveness of the programming. This measure looks at the changes that were made due to programming or what was achieved.

Participant Feedback & Accounts of Change

Participant accounts of change gain first hand perspective of the programming. By engaging participants and reflecting on the programming, an organization can document individualized qualitative behavior change.

Benchmarks & Comparisons

Benchmarks and comparisons allow organizations to observe and measure changes in their own performance as well as observe and measure differences between their organization and others of a similar theme or size.

Nonprofit Accountability with Stakeholders

Nonprofit organizations have many stakeholders including donors, foundations, staff members, volunteers, governments, community members, etc. Generally, nonprofit organizations maintain accountability with funders but fail to look to other stakeholders. By creating accountability with various stakeholders, the organization can harness the voices around them and continue to improve.

Raises Awareness of Nonprofit & Theme

A nonprofit organization should always attempt to raise awareness of the organization and programming and the theme of impact. This will increase visibility to both and contribute to new knowledge about the theme amongst stakeholders.

Volunteer & Donor Retention

Retention of both volunteers and donors aids organizational impact and sustainability and directly translates to monetary assistance.

Historical Data Collection

By tracking and documenting organizational changes over time, true impact can be monitored. Recording historical data will allow the organization to continue to grow and adapt programming, whether it be web and email analytics, fundraising and donor analytics, or program analytics.

Long Term Benefits

A nonprofit organization should not only focus on the potential immediate benefit of programming but also the long term implications and outcomes for the community.